CJFerreira

It is $0.70 per contract whenever you make a trade. If you do a single contract vertical spread, that's $1.40 (buy one option; sell one option). If you sell the spread, that's another $1.40. As per my earlier post, that $0.70 per contract is more a guideline than a rule, since they add in exchange fees and rebates, which can be significant. I ended up paying anywhere from $0.45 to $1.09 per contract, with no way to predict what it would be each time. People say that in the long run it averages out to around $0.75 per contract.

Well, I forgot to roll my puts last week and was assigned on 1/3 of them this morning (GLD currently at $127.29). I bought back the rest and sold the full allocation - STO Sep 21 128 put @ $2.12 I also sold a slightly ITM call against my assigned shares - STO Sep 21 126 call @ $2.58. This will cover me to $124.71 or recoup some loss otherwise. I need to watch those rolls!

Thank you all. This has been an interesting read!

Is this a flaw in the pricing, or in our understanding? With no dividends to account for and interest rates very low, the diversion shouldn't be off by 10 points.

Yeah, I thought about dividends making a difference, but this is Netflix (NFLX), and there aren't any. You can see the ATM calls on NFLX for the Jan 2015 are showing a delta of over 0.60 using TOS as well as the CBOE option calculator.

My understanding has always been that the delta of an ATM option is 0.5. The fact that the number varied slightly I attributed to small variance in market values or even inaccuracies in the calculation. But when I look at LEAP greeks, I see the furthest expirations have a delta that is not even close. For example, at this time an ATM call of 0.61 for calls and -0.39 for puts. The SPY options are much closer - 0.52 for calls and -0.50 for puts (odd - I thought these two numbers always should add up to 0?). I notice also that the calls tend to run a little over 0.5, while puts tend to run a little under. Does anyone have an explanation for this behavior?

Just to throw my 2 cents in here. I look at this site as an opportunity to watch a successful trader do his thing in as close to real-time as possible, with a willingness to provide insight and rationale for each trade. I often see a trade discussion open up with an analysis of a trade that has not been made yet, often with a target price and strategy. Follow-on discussions may reveal further information about what makes this a good or poor possibility. This is about as close as someone can reasonably get to posting the trade before it happens. I figure that I'm paying for the ability to watch over Kim's shoulder, and I hope to gain insight into what appears to be a successful trading strategy. I've missed a lot of good trades because I was too cautious in chasing the trade. I have also missed some losers. If I can ride Kim's coattails while I learn and experiment, then I will not complain if I can't do *quite* as well as Kim. Perhaps someday I will. And that is an in-the-trenches sort of education that I am happy to have.

I definitely see advantages for some people to using IB, mostly in the margin areas. However, this was an IRA account and so I had no margin benefit at all. I was led to believe that they would give trading credit for trades not settled yet, i.e., they would allow a new trade before the prior trade had settled, even in an IRA account - a sort of limited margin - but that did not turn out to be the case. This was probably my misunderstanding, but it added to my dissatisfaction. Their security was a big deal for me. Having to keep this security number generator available at all times in case I needed to make a trade; make sure I could always locate it and not lose it, and their system doesn't permit any access via an iPad, which for me was a big inconvenience. When you start talking about Master and Client accounts and liking them together I start thinking of major brokerages or people who for some reason have numerous accounts, not really something that works for someone who might log on once or twice a day to monitor or make a trade. Also, let me be clear that I do NOT believe they were messing with my account in any way. However, that said, I could not reconcile their trading statement to my portfolio. Maybe the "extra" trades had already expired and been removed from my portfolio. Seeing these errant trades made me very nervous. Their lack of customer service and support as I try (it still hasn't gone through) to move my portfolio out of their system raises very bad memories of brokers who were great when you wanted to purchase shares from them, but stonewalled you when you tried to get your money out. My family was burned by Harry Stern and Technical Equities in the 1980s and so I am very leery of any broker that does anything to keep you from moving your portfolio.

My point was that their commissions, though advertised as being so low, are quite variable and not really as low as they make it appear due to the unpredictable and sometimes amazingly large "exchange fees". I find their "security" to be disruptive, very inconvenient, and - considering the bizarre conditions they put on their usernames and passwords - a lot more trouble than it's worth. For me, their security system is more inconvenient and more likely to cause me trouble than it's worth. The trust issue is based on their failure to notify me of any hold issues on my account, refusing to transfer funds (again without contacting me) due to an extremely small hold amount, and the fact that in viewing their trading reports and portfolio statement I was unable to reconcile the two. Out of 12 trades, I had two that I had no memory of placing, although they were of securities and quantities (although perhaps selling instead of buying) that I was trading in. These were the trades I identified as probably "accidental" trades, but the fact that I could not see any correlation between the trading report and my actual portfolio leaves me with a deep feeling of unease with their procedures and system. I only relate my actual experience with them. As with all anecdotes, your mileage many vary, but I offer this as a cautionary tale for those who might be lured by the promise of super low commissions so long as you know what you're doing. I know what I'm doing, but I am not willing to do it with Interactive Brokers.

I switched my IRA to Interactive Brokers for about two weeks before switching it back to E*Trade. During that two week period I did not experience any noticeable improvement in fills. Their advertised rate of $0.70 per option commission was a total joke. My actual costs ranged from $0.49 to $1.09 per option due to unpredictable exchange fees, and my negotiated commissions at E*Trade for similar trades during the same period were less! I appear to have made two accidental trades during this period (maybe?) which were probably due to their awful trading interface (my fault - learning curve?), but I couldn't seem to reconcile their trading report with my portfolio display (WTF?!) When I put in a request to transfer the portfolio back to E*Trade, they refused to release over $500k in my portfolio because a $300 dividend check forwarded from E*Trade had not cleared their 10-day holding period. This only came to light when I pressed them as to the hold-up (pun not intended). At this time I still don't have any movement after a week's time. With E*Trade I negotiated $0.60 per option with a reduced fee of $4.99 which is spread over all legs of a single order, so a 10-contract Iron Condor would cost me a total of $0.60 x 10 contracts x 4 legs = $24 + $4.99 = $28.99 total commission, or about $0.72 per option. The same trade using IB might run over $40, depending on the exchange fees. Granted, this special rate with E*Trade may be due to my account size, but the overall costs with IB was nowhere near their advertised prices, plus they nickel and dime you for everything on top of that. Finally, I was totally frustrated with their log-on process. They require you to use a physical authentication card that requires you to carry a credit card sized device that generates security codes that must be entered when you log in. If you don't happen to have the card with you, or you lose it, you cannot access your account. Well, you probably could after telephoning a live person, but that could be problematic in off hours... No entering trades using an iPad either. Bottom line is that I don't trust IB to service my account in a professional way. Their prices are unreliable and unpredictable, and their interfaces are awkward, to say the least. Maybe others believe that they can get better fills from them (I couldn't), but personally, I wouldn't trust them with my money.